Internet billing method

ABSTRACT

An Internet billing method comprises establishing an agreement between an Internet access provider and a customer, and an agreement between the Internet access provider and a vendor, wherein the Internet access provider agrees with the customer and the vendor to bill the customer and remit to the vendor for products and services purchased over the Internet by the customer from the vendor. The provider creates access to the Internet for the customer. When the customer orders a product or service over the Internet from a vendor, transactional information transmitted between the customer and the vendor is also transmitted to the provider. The provider then bills the transaction amount to the customer and remits a portion of the transaction amount to the vendor, keeping the differential as a fee for providing the service. As a result of this method, there is no need for any customer account numbers or vendor account numbers to be transmitted over the Internet, thereby maintaining the security of that information.

BACKGROUND OF THE INVENTION

[0001] The present invention relates to a method of billing forcommercial transactions over the Internet.

[0002] The Internet is a vast worldwide interconnection of computers andcomputer networks. The Internet does not consist of any specifichardware or group of connected computers, rather it consists of thoseelements that happen to be interconnected at any particular time. TheInternet has certain protocols or rules regarding signal transmissionand anyone with the proper hardware and software can be part of thisinterconnection.

[0003] At present, the technical and financial requirements forconnecting directly to the Internet are beyond the resources of mostindividuals and thus new businesses known as Internet access providershave proliferated. These providers invest in the equipment needed toprovide access to the Internet for subscribers who pay the providers afee for the access. Providers include companies whose only business isto offer connection to the Internet, as well as on-line services such asCompuserve, American On-Line, and Prodigy. In addition, telephonecompanies and cable television companies have announced plans to provideInternet access. A party desiring to connect to the Internet by means ofa provider typically connects via a modem over a telephone network tothe provider's equipment which then connects the party, through theprovider's equipment, to the Internet.

[0004] Although the origin of the Internet was for military use, todaythe primary users of the Internet are civilian. There is great activityat present attempting to utilize the Internet as a channel of commerce.

[0005] Many vendors advertise their products and services over theInternet and solicit orders from Internet users for these wares. Whilethe preferred mode of payment is by credit card, there is greatreluctance to transmit credit card account information over the Internetbecause of lack of security. Moreover, in situations wherein thetransaction amount is small—from pennies to a few dollars—it is noteconomically feasible to use a credit card transaction. There is a needto be able to ensure that commercial transactions over the Internet areat least as secure as conventional transactions over the telephone,through the mails, and with on-line services where credit cards and/orbilling accounts are used for purchases. Similarly, there is a need tobe able to handle on the Internet a large number of small-sizedtransactions, similar to what is done by telephone companies forconventional telephone service.

[0006] The lack of security and the lack of a means to bill for smalltransactions are the biggest obstacles to commercial use of theInternet.

SUMMARY OF THE INVENTION

[0007] The main object of the present invention is to create a newbusiness opportunity for telephone companies, cable televisioncompanies, existing Internet access providers, and companies offeringfinancial services by creating a way for them to offer to theirsubscribers a method of securely buying and selling goods and servicesof any value over the Internet.

[0008] Another object of the present invention is an Internet billingmethod which is cost effective for transactions having transactionamounts ranging from pennies to a few dollars.

[0009] Still another object of the present invention is to provide asecure method of billing commercial transactions over the Internet.

[0010] A further object of the present invention is an Internet billingmethod which is simple to use from both the customer's point of view andthat of vendors on the Internet.

[0011] Yet another object of the present invention is a billing methodwhich can be used by a large number of existing Internet users withoutrequiring major changes in how the users customarily behave and conductcommercial transactions.

[0012] These and other objects and advantages of the present inventionare achieved by an Internet billing method in accordance with thepresent invention. A provider establishes an agreement with a customer,and a second agreement with a vendor, wherein the provider agrees withthe customer and the vendor to bill for products and services purchasedover the Internet by the customer from the vendor. Associated with thecustomer agreement are one or more billing accounts to which purchasesmay be charged. Associated with the vendor agreement are one or moremethods of remitting funds to the vendor. The provider creates access tothe Internet for the customer through the provider's equipment. When thecustomer orders a product or service over the Internet from the vendor,the provider obtains transactional information transmitted between thecustomer and the vendor including a transaction amount relating to theordered product or service and the provider then bills the transactionamount to a customer billing account and remits a portion of thetransaction amount to the vendor.

[0013] Which accounts are used may be specified in the agreements madebetween the provider and the customer and between the provider and thevendor, or may be specified in the transactional information. Ifspecified in the transactional information, the selection of account canbe made by referencing the type of account (e.g., “VISA”, “phone bill”),or the position of that account on a predetermined list (e.g., “the 3rdaccount”), and does not require that any actual account numbers betransmitted.

[0014] By the use of this method, there is no need for the customer totransmit over the Internet any information containing any of thecustomer's billing account numbers thereby maintaining the security ofthat information.

[0015] The present invention, in a preferred embodiment, is a method ofproviding merchants with the ability to offer their customers securetransactions for the purchase of goods and services of any value overthe Internet, without the need for the customer to transmit any creditcard or other account numbers over the Internet, without the need forthe customer to sign up with any additional provider of services, andwithout the need to change the manner in which most customers currentlyuse the Internet.

[0016] In accordance with the present invention, a customer desiring topurchase goods and services over the Internet has prearranged access tothe Internet through the services of an Internet access provider. Suchproviders can be, for example, companies whose only business is to offerconnection to the Internet, companies which offer on-line computerservices, one of which is connection to the Internet, cable televisioncompanies, or telephone companies. In arranging for access with such aprovider, the customer has agreed with the provider on a method ofpayment which is, for example, by billing, or charge to a credit card,or charge to an account of the user which could be an account specificto the Internet or could be a more general account, such as an on-linecomputer services account, a cable television account, a telephoneaccount, or a bank account.

[0017] Once the prearrangements have been completed, using theprovider's service to connect to the Internet typically involves callinga telephone number of the provider and being automatically connectedthrough the provider's equipment to the Internet.

[0018] Once connected to the Internet, the customer can browse arounduntil an item is located that the customer wishes to purchase, at whichtime the customer will follow the instructions created by the vendor,exchange transactional information, and ultimately agree to purchasesomething by taking an appropriate action. In the course of making thepurchase, the means of delivery of the goods or service will beestablished. Depending on the type of goods, delivery can be made, forexample, by mail (e.g., in the case of a purchase of a book), by courierservice (e.g., in the case of a purchase of flowers), or by electronictransmission over the Internet (e.g., in the case of delivery of anelectronic newsletter or piece of software). The remaining element ofthe purchase transaction is the manner in which the customer pays thevendor.

[0019] In accordance with the present invention, the provider has madearrangements with vendors who wish to sell goods and services over theInternet to the customers of the provider. The provider agrees to do thebilling associated with such sales for the vendors, and as part of theagreement, the provider and the vendor have agreed on the manner inwhich the provider will remit funds to the vendor. Examples of paymentinclude payment by check, credit to the vendor's credit card merchantaccount, or credit to another account of the vendor's, such as thevendor's cable television account, telephone account, or bank account.The account of the vendor to be credited need not be with the provider.The arrangements that are made will depend on the vendor's desires andthe capabilities of the provider. For example, if the vendor anticipatesmany small transactions and the provider is a telephone company, theycan agree that the provider will credit the vendor's existing telephoneaccount for amounts under some nominal amount and credit the vendor'scredit card merchant account for larger amounts. If the vendoranticipates large transactions, then they may agree that the providerwill pay by check or direct credit to the vendor's bank account.

[0020] In a typical transaction in accordance with the presentinvention, from the customer's point of view all use of the Internetappears to be conventional. Depending upon the prearrangements madebetween the provider and the customer and between the provider and thevendor, the customer can charge a purchase, for example, to a creditcard, to a cable television account, to a telephone account or to a bankaccount. The account of the customer to be billed need not be with theprovider. For example, the customer may be using one telephone companyas an access provider and a second telephone company as a telephoneservice provider and the account to be billed is that with the secondtelephone company. The customer specifies which account is to be billedby an indication to the provider, but neither the customer nor thevendor has to transmit any account numbers over the Internet, because itis the provider, not the vendor, who submits the charge to the creditcard company, the cable television company, the telephone company, or toanother account of the customer, or who debits the bank account of thecustomer, and the provider already has been given, during the course ofmaking prearrangements with the customer and the vendor, the appropriateaccount numbers of both the customer and the vendor. The provider sendsthis information to the appropriate party, and may do so by the samesecure means customarily used for similar transactions not made over theInternet.

[0021] From the vendor's point of view, the transaction is as secure asa transaction made over the telephone with a credit card. If the vendorwishes, the vendor may verify with the provider that the addresssupplied by the customer for shipment of the goods has been authorizedby the customer in the same manner in which such verification would bemade for the same transaction made over the telephone with a creditcard. In addition, because such a verification does not require thetransmission of any account numbers of the customer, the verificationcan be done over the Internet as part of the transaction transmissionitself if the provider and the vendor have prearranged to do so.

[0022] From the provider's point of view, the provider is made awarethat the customer has authorized the charge by monitoring the data beingsent over the Internet through the provider's equipment between thecustomer and the vendor. This can be done, for example, by specifying aspecific code which, when sent between the customer and the vendor,indicates to the provider that a transaction has been completed. Whenthe customer has made a purchase, the provider charges the transactionamount to the agreed account of the customer and remits the agreedportion of that amount to the vendor, keeping the differential as theprovider's charge for making the service available.

[0023] These and other features and advantages of the present inventionwill become apparent from the following detailed description of theinvention with reference to the attached drawings, wherein:

BRIEF DESCRIPTION OF THE DRAWINGS

[0024]FIG. 1 is a block diagram of a system for carrying out the billingmethod according to the present invention;

[0025]FIG. 2 is a flow chart of one embodiment of the method accordingto the present invention; and

[0026]FIG. 3 is a flow chart of another embodiment of the methodaccording to the present invention.

DETAILED DESCRIPTION OF THE INVENTION

[0027] Referring to FIG. 1, a system for carrying out the method of thepresent invention is shown. In that system, the Internet is shownschematically as network 1 to which providers 2, 9, vendors 5.1-5.n,6.1-6.n and 8.1-8.n, and customers 4.1-4.n and 10.1-10.n (where n is aninteger to indicate a range from one to many) are connected in differentways.

[0028] Provider 2 is connected to access network 3 and the Internet 1and provides access to the Internet 1 for customers 4.1-4.n and vendors6.1-6.n connected to access network 3. Access network 3 can be atelephone network, a cable television network, an on-line servicesnetwork such as Compuserve, American On-Line, or Prodigy, or a privateInternet access network. Similarly, provider 9 is connected to accessnetwork 7 and the Internet 1 and provides access to the Internet 1 forcustomers 10.1-10.n and vendors 8.1-8.n. Vendors 5.1-5.n access theInternet directly by their own equipment.

[0029] In accordance with the method shown in the flow chart of FIG. 2,for example, in step 11 provider 2 establishes agreements with vendors5.1-5.n who are connected directly to the Internet, with vendors 6.1-6.nwho access the Internet via access network 3 and provider 2, and withvendors 8.1-8.n who are connected to the Internet 1 via access network 7and provider 9, to bill customers 4.1-4.n for goods and servicespurchased by them over the Internet from vendors 5.1-5.n, 6.1-6.n and8.1-8.n. Provider 2 also agrees to remit a portion of the collectedmoney back to the vendors. Provider 2 also establishes an agreement witheach of customers 4.1-4.n. These agreements provide that the providerwill bill the customer for goods and services purchased by them over theInternet. The billing will be done to billing accounts established inconnection with the agreements. The billing accounts can be, forexample, credit card accounts, telephone accounts, cable televisionaccounts, on-line services accounts, or bank accounts. The accounts neednot be with the provider if the provider has a billing agreement inplace with the party with whom the account was established.

[0030] As part of the services of the provider to customers 4.1-4.n, thecustomer is connected to the Internet 1 in step 12 at a desired time,typically by making contact via modem. Once connected to the Internet,the customer can interface with any one of vendors 5.1-5.n, 6.1-6.n and8.1-8.n in order to find out about products or services offered by thosevendors.

[0031] When one of customers 4.1-4.n makes the decision to order aproduct or service from one of vendors 5.1-5.n, 6.1-6.n and 8.1-8.n, instep 13 an exchange of transactional information occurs between thecustomer and the vendor. This exchange may include identifyinginformation relating to the customer, such as the customer's Internetaddress, information relating to the products or services to bepurchased, including the transaction amount, the manner and time ofdelivery, and a reference number to identify the order. The vendor orthe customer also can produce a verification code signifying that atransaction has been completed which can be received by provider 2.

[0032] In step 14, the transactional information is obtained by provider2. The communication can be a separate transmission by the vendor or thecustomer to provider 2, or provider 2 can extract the information fromthe exchange of information taking place between the customer and thevendor through equipment of provider 2. Provider 2 can then sendverifying information to one or both of the customer and vendor toindicate that the transaction has been approved, if approval of a thirdparty, such as credit card company, is required. Most importantly, theentire transaction takes place without the need of communicating thecustomer's credit card or other account number over the Internet 1.

[0033] The product or service is delivered to the customer in step 15and the appropriate customer account is billed by provider 2 in step 16.Provider 2 then remits the agreed payment in the appropriate manner tothe vendor in step 17, keeping the differential as a service charge forthe services rendered by provider 2. Steps 15, 16 and 17 may beperformed in any order.

[0034] As can be seen from FIG. 1, the method according to the presentinvention can be carried out in many ways. For example, referring toFIG. 3, vendor 5.1 in step 21 can establish remitting agreements withprovider 2 and provider 9 to remit to vendor 5.1 a portion of atransaction amount billed to the billing account of any one of customers4.1-4.n and 10.1-10.n.

[0035] Similarly, each of vendors 6.1-6.n can establish a remittingagreement with provider 9 for transactions carried out over the Internetbetween each of vendors 6.1-6.n and customers 10.1-10.n.

[0036] A customer connects to the Internet in step 22. The customerexchanges transactional information with the vendor in step 23 and thevendor delivers a product or service to the customer in step 25, eitherbefore or after the vendor receives remittances from the provider instep 27.

[0037] In accordance with another feature of the present invention,prior to the billing of the transaction amount to the account of thecustomer, and after obtaining the transactional information, theprovider can obtain approval from a third party to bill the transactionamount to the billing account. This is particularly true in the casewhere the billing account is a credit card account or a bank account. Inthat instance, approval must be obtained from a third party, i.e., thebank issuing the credit card or with whom the bank account wasestablished. Where the account is with the provider, approval would beobtained from the provider itself. In a preferred embodiment of thepresent invention, the approval can be obtained over the Internet andmost preferably during the communication between the customer and thevendor.

[0038] In accordance with a further feature of the present invention,the customer can specify a particular billing account, for example, acredit card account, a bank account, a telephone number account, a cabletelevision account or an on-line services account at the time that thebilling agreement is established with the provider. The specificationcan provide that one account will be used for certain transactions, anda different account for other transactions, for example, a telephoneaccount for transactions less than $5.00, and a bank account fortransactions of at least $5.00. Thereafter, whenever the transactionamount is to be billed, it will be billed to that specified billingaccount. Alternatively, the customer can specify a plurality of billingaccounts, for example, an AMEX account, a VISA account, a Mastercardaccount at the time that the billing agreement is established. When thetransactional information is communicated, it will include anidentification of which of those plurality of billing accounts thecustomer wants billed, without, however, specifying the account numberof the account. Thus the customer can merely indicate the account by the“brand” name AMEX, VISA or Mastercard or the customer can identify it asthe first account, second account or third account on a list previouslyestablished with the provider.

[0039] As noted above, the billing account is not necessarily with theprovider, that is, it can be with a third party such as a bank issuing acredit card, or a bank at which the customer has a bank account.Alternatively, the provider can be a first telephone company, but thebilling account can be with a second telephone company and charged bythe first telephone company to the telephone number account of thecustomer with the second telephone company, as is customarily done inconnection with conventional telecommunications services.

[0040] In accordance with the invention, the remitting can be by meansof sending money or by crediting a vendor account such as a credit cardmerchant account, a bank account, a telephone number account, a cabletelevision account or an on-line services account.

[0041] In a preferred embodiment of the present invention, the step ofestablishing the remitting account comprises specifying a particularvendor account to which the portion of the transaction amount will beremitted. The specification can provide that one account will be usedfor certain transactions, and a different account for othertransactions, for example, a telephone account for transactions lessthan $5.00, and a bank account for transactions of at least $5.00. In analternative embodiment of the present invention, the step ofestablishing the remitting agreement comprises the vendor specifying aplurality of vendor accounts to which a portion of the transactionaccount can be remitted. Thus when the transactional information iscommunicated, the vendor can identify which one of the plurality ofvendor accounts the amount is to be remitted to without, however,specifying the specific account number.

[0042] The vendor account can be an account with the provider or anaccount with a third party such as a credit card merchant account, orbank account, with a bank, or a cable television account with a cabletelevision company.

[0043] It is understood that the embodiments described hereinabove aremerely illustrative and are not intended to limit the scope of theinvention. It is realized that various changes, alterations,rearrangements and modifications can be made by those skilled in the artwithout substantially departing from the spirit and scope of the presentinvention.

What is claimed is:
 1. An Internet billing method comprising the stepsby an Internet access provider of: establishing a billing agreement withat least one customer and a remitting agreement with at least one vendorto bill a billing account of the at least one customer for products andservices purchased over the Internet by the at least one customer fromthe at least one vendor and to remit to the at least one vendor;connecting the at least one customer to the Internet; obtainingtransactional information over the Internet from communications over theInternet between the at least one customer and the at least one vendorrelated to a purchase over the Internet by the at least one customerfrom the at least one vendor, wherein the transactional informationincludes a transaction amount; billing the transaction amount to thebilling account of the at least one customer; and remitting a portion ofthe transaction amount to the at least one vendor.
 2. The methodaccording to claim 1, further comprising after the step of obtaining thetransactional information and before the step of billing the transactionamount: obtaining approval from a party other than the customer to billthe transaction amount to the billing account of the least one customer.3. The method according to claim 2, wherein the approval is obtainedfrom the provider.
 4. The method according to claim 2, wherein theapproval is obtained from a third party.
 5. The method according toclaim 2, wherein the approval is obtained over the Internet.
 6. Themethod according to claim 5, wherein the approval is obtained duringcommunications between the at least one customer and the at least onevendor.
 7. The method according to claim 1, wherein the billing accountis one of a credit card account, a bank account, a telephone numberaccount, a cable television account, and an on-line services account. 8.The method according to claim 1, wherein the step of establishing thebilling agreement comprises establishing a specification for selecting abilling account to which the transaction amount is billed.
 9. The methodaccording to claim 1, wherein the step of establishing the billingagreement comprises specifying a plurality of billing accounts andwherein the transactional information includes identification of one ofthe plurality of billing accounts to which the transaction amount isbilled without specifying an account number.
 10. The method according toclaim 1, wherein the billing account is an account with the provider.11. The method according to claim 1, wherein the billing account is anaccount with a third party.
 12. The method according to claim 1, whereinthe step of remitting comprises sending money.
 13. The method accordingto claim 1, wherein the step of remitting comprises crediting a vendoraccount.
 14. The method according to claim 13, wherein the vendoraccount is one of a credit card merchant account, a bank account, atelephone number account, a cable television account, and an on-lineservices account.
 15. The method according to claim 13, wherein the stepof establishing the remitting agreement comprises establishing aspecification for selecting a vendor account to which a portion of thetransaction amount is remitted.
 16. The method according to claim 13,wherein the step of establishing the remitting agreement comprisesspecifying a plurality of vendor accounts and wherein the transactionalinformation includes identification of one of the plurality of vendoraccounts to which the transaction amount is billed without specifying anaccount number.
 17. The method according to claim 13, wherein the vendoraccount is an account with the provider.
 18. The method according toclaim 13, wherein the vendor account is an account with a third party.19. The method according to claim 1, wherein the transactionalinformation does not include the billing account number to which thetransaction amount is billed.
 20. The method according to claim 1,wherein the transactional information does not include any accountnumber.
 21. An Internet billing method comprising the steps by a vendorof: establishing a remitting agreement with at least one Internet accessprovider to remit to the vendor a portion of a transaction amount billedto a billing account of at least one customer of the at least oneInternet access provider for products and services purchased over theInternet by the at least one customer from the vendor; exchangingtransactional information over the Internet with the at least onecustomer related to a purchase over the Internet by the at least onecustomer from the vendor, wherein the transactional information includesa transaction amount; delivering the purchased product or service to theat least one customer; and receiving the portion of the transactionamount from the at least one Internet access provider.
 22. The methodaccording to claim 21, wherein the step of receiving comprises receivingmoney.
 23. The method according to claim 21, wherein the step ofreceiving comprises receiving a credit to a vendor account.
 24. Themethod according to claim 23, wherein the vendor account is one of acredit card merchant account, a bank account, a telephone numberaccount, a cable television account, and an on-line services account.25. The method according to claim 23, wherein the step of establishingthe remitting agreement comprises establishing a specification forselecting a vendor account to which the portion of the transactionamount is remitted.
 26. The method according to claim 23, wherein thestep of establishing the remitting agreement comprises specifying aplurality of vendor accounts and wherein the transactional informationincludes identification of one of the plurality of vendor accounts towhich the portion of the transaction amount is remitted.
 27. The methodaccording to claim 23, wherein the vendor account is an account with theat least one provider.
 28. The method according to claim 23, wherein thevendor account is an account with a third party.
 29. The methodaccording to claim 21, wherein the transactional information does notinclude the billing account number to which the transaction amount isbilled.
 30. The method according to claim 21, wherein the transactionalinformation does not include any account number.